the other problem with the 6-10% return theory is that if the housing market recovers, doesn’t my FHA payment go down? so Im not really guaranteed i pay more with fha, only if the market doesn’t recover and i don’t have an equity stake high enough to cancel out the higher loan payment with FHA.

for instance. what if housing goes up 20% in 5 years? then the FHA PMI is cancelled out. I’m not paying more per month. if i only get the 3828 benefit annually for 5 years, then I saved 19,000. net loss, 21,000, since I put down 40k to save 19k, not counting the 6k premium that’s done when we settle up. So not only am I not getting anything, I’m LOSING money by putting money down. IS THIS A POSSIBLE SCENARIO? if so, and it is even somewhat likely, it seems insane to put down 20% Seems like putting 20% down is kind of a bet that housing will continue to go down, in regard to the choice between fha and conventional, since the benefit from 20% down only accrues relative to fha if housing continues to tank. But if housing continues to tank, that seem to militate in favor of FHA.

what am I missing? i would hate to put down 20% and figure out afterwards that it was absolutely irrational. I really appreciate input from people who’ve thought this through more deeply than me…